ok so,
im reading all of this economic depression doom and gloom stuff....


here's the thing,
econ is not my strong suit. im a 22 year old college student, and i live in a dorm during the school year and with my parents in the summer. so basically i havent been out on my own yet. ive been on this site for years..so most of you know that about me already

so all of this talk about the stock market..percentages....muni bonds yada yada..has me completely lost as to the actual impact of this.

i get the the whole scenario of the dollar dropping and what that means..that is simple enough.

but since i dont understand most of this because i havent been a participant yet..im not grasping how this is actually going to effect me. can someone please explain how all of this is going to effect the average citizen like ME? what will be visible changes that i will see? what aspects of my life will actually change?

Thanks a bunch!

Digitalgrl

[edit on 10/01/2004 by DigitalGrl]

great topic and good idea to bring this to a level that is more realistic for many of us

some changes will be difficulty in getting certain lines of credit such as loans for automobile's , home loans, and the loans (if you can get them) will be at higher intrest rates. Very Good credit will become very important. it will propably be a good idea to go ahead and hold off untill banks can hopefully re capitalize and lending conditons will eventually become more favorable next year.

if you already own a home, you may watch as your remaining mortgage payment becomes higher than the actual value of your home ("becoming "upside down").

Also Higher Unemployment and dwindling job opportunity's will likely become reality. Company and Business Earnings are lowering and the biggest expense for many company's is payroll so you cut some employee's alot of times in these situations. Retailers's and Resteraunts and Spa's will suffer from lower "store traffic" as extra spendable income decreases (amidst higher cost's of living, and lower investment values) so some will go out of business. Get ready to see many more open spots in strip malls and "for rent" signs. all income levels will be effected.

IMO the thing to watch out for is Unemployment getting out of control.

Also if you are an investor i would watch out for the markets of emerging economy's as well as those like Russia, India, China because there are asset bubbles here that will likely be punctured (this may eventually help international money flows back into the u.s markets toward the end of the year or by 09 IMO but the stocks are goinging lower first, but besides that their is tons of uncertainty here.

Also as far as the dollar falling (lately it has stabalized) often when it falls prices for imports will rise (unless other country's currency's are being depressed in tandem) these imports include the goods you buy at the toy store as well as the department store and especially the grocery store (although this is also due to supply constraints and ethanol subsidies)

Oh ya state budget's will be cut since they lost alot in the markets, so some parks may be closed, educational activities and extra's will be cut, health care cost's will rise

and you may notice a lot of wealthy people will be in real sour moods.


[edit on 20-1-2008 by cpdaman]

Stock up on ammo, canned food and water. Don't buy anything on credit this year...

Thankfully, i am not a credit abuser. (i have one credit card and pay it off completely when the bill comes in every month). i have no student loans, i work at a hospital while i go to college. most of you know im majoring in history and secondary ed and minoring in philosophy so obviously my profession is in teaching...which seems to be a pretty safe field atm. ill be out of college this time next year. and my fiance is a police officer soon to be detective which im sure that job will be safe as well. however we are getting married july 24th of 2009, we dont own a home yet for obvious reasons...mainly because we dont believe in living to gether before marriage but also because i live in a dorm at college. so im concerned about buying our first home in the middle of all of this. i checked my fica score the other day and it is 780 which i guess is great and he said his is in the 700's as well. so from your opinon is that a good position to be in credit wise when we decide to purchase a home?

Thanks a bunch!
Digitalgrl

[edit on 10/01/2004 by DigitalGrl]

Credit abuse is a major reason we are in this situation. The banks are not all to blame....I'll use this example of my uncle because it fits what I think many Americans do, not all. My uncle can not get credit at all anymore...why you ask? Because he literally has a $1 million dollars worth of debt, probably more, but I know a $1 mil for sure....now, my grandmother decided, hey, it'll be a good idea to let him use my card. Instead he charged it up twice, putting everything on it from Taco Bell, yes Taco Bell, to groceries and lots of fast food restaurants.

Heres the problem, if he doesn't pays it back, it's ok because its not his card, my grandma had to pay, which she did...hope she learned her lesson but thats a different story. Anyways, to get on with it, I think many people do what he does. Case in point, all these foreclosures. I know my uncles house is not worth now what he paid for it, so if the mortgage company forecloses on him, what do they gain? Nothing, they take a loss because they can't get what it was worth.

A lot of people think credit is cash, but it's not and those finance charges will keep you paying it off forever. 18% thats ridiculous, and, thats not the bad part, it can go as high as 31%. I'm looking at my cards now and that's basically what they say give or take a few percentage points. So people go out and spend, spend, spend and they can't pay, a major reason the country is in this mess. Now, the lenders are to blame too, they did give out quite a bit of bad loans, which is an understatement. I know it was easier to get a house than an appartment before this crisis hit. The thing is, the Fed and now Bush are going to add another bandaid or crutch to it and things will get better for a while, but it's not really fixed.

I'm only 23 so I'm not much older than you DigitalGrl, so I know how it is to be young and worry about credit ratings, the value of the dollar, and things of that nature. My cards are always paid off, and if I don't have the money, I don't use the card to get something, it's just not worth the risk. I know some people will pay the minimum, but that will come back to get you. Right now, if I had the cash, I could get a house in my area for probably less than 100K and I'm talking 3-4 bedrooms and something that will actually resemble a lawn, but this is Texas so prices are cheaper.

If you have the cash, now is a great time to be buying into the market. Most people will tell yo otherwise because they're scared, but, there are a lot of "sales" right now of good companies that aren't even related to the credit crisis that are getting hurt. My investments as of today look like crap; my stock return is -27% and my overall return is -18%, but, I'm not selling, and I'm not too worried, even if it is pissing me off as I watch my good investments bleed. If I had the money to be buying, I guarantee you I would be.

Originally posted by ChrisJr03
Credit abuse is a major reason we are in this situation. The banks are not all to blame....

Excuse me... *Who* exactly financed the credit? Who encouraged us to take more, much more than we could ever safely have access to. Do you know that some animals will eat themselves to death on certain foods? Farmers have to be aware of this if they want to keep horses around. Banks also have to be aware of this if they would like to keep a "healthy" credit business going.

Instead they decided to go the shooting star route, which has brought this all down on their heads. So, I say, just desserts.

Yes, the banks may not be to "blame", but they are what caused it, end of story.

ever wonder, maybe it was this free and easy credit...for consumers, but also for businesses, that has kept the economy going this far??
in which case, this blame game is irrelevant, since if we the people weren't out buying houses we couldn't afford then all those people working in the real estate and building houses and such would have been laid off a long time ago. if we hadn't been out there spending money we didn't have, this economy would have tanked years ago!!

Originally posted by Rilence


But IMHO, if consumers are ignorant, that's their fault...Nothing wrong with doing some homework and not doing things on impulse...Nothing wrong with buying a $250K house instead of a $600K job either...

I have little sympathy for those affected by the current credit situation world wide...

Caveat Emptor, as always...

Peace

Fair point, I guess, but realistically, if you offer people the chance to borrow huge amounts of money, if indeed you advertise that chance as a gleamingly brilliant financial product, people are going to buy that product. In the UK, the concept of home owning is incredibly deeply embedded in the national psyche - "an Englishman's home is his castle", and so on. But the price of owning property far exceeds the majority of people's ability to afford it.

The alternative is renting, but the rental market is legally so heavily weighted in favour of landlords, and so against tenants, that the rental experience can be pretty horrific - particularly in the city.

So the public are torn between safe, secure housing they cannot afford, and the opposite in the rental market which they cannot tolerate.

Add all those things together and you get a credit crisis, but in my view the consumer is not to blame for it.

Attributing blame is in some ways less constructive than attributing responsibility. People will always make mistakes - but ought banks be permitted in future to lend at such an absurdly irresponsible rate?

LW

"and some companies also issue earnings downgrade for 1st Q, then we have a whole new ballgame"

My own company got abused for forecasting a lower Q1 due to a weakening global economy and possible US recession. I think that many companies are going to echo the same statement. So I think your whole new ballgame is going to be played sooner, rather than later.

In regards to your #3, I just don't see that type of honesty happening in business or politics anymore. Again, I am being negative here but I just don't think that one will happen.